Why does Shell support a cap-and-trade model over a carbon tax?

Shell supports market-based mechanisms to combat climate change whenever practical. We believe the flexibility of cap-and-trade programs can help companies achieve emissions reductions at the lowest cost. The problem with a tax is that although it gives you price certainty on emissions, it does not guarantee a particular emission reduction level.

What environmental trading products and services do Shell offer?

Shell offers a basket of ‘environmental solutions’, of which environmental trading solutions are a part (others include technology improvements and low-carbon fuels). Environmental trading solutions generally refer to emissions cap and trade schemes (like the EU ETS where EUAs, CERs and ERUs are traded) or renewable energy requirements (where RECs, ROCs or GOOs are traded).

Emissions or REC trading could be for customers that are covered by regulations – like the EU ETS in the case of CO2 emissions – or that are pursuing the benefits of voluntary offsetting. These products trade similarly to other energy commodities like natural gas or crude, but they are not tangible commodities. Still, they are real and can be bought and sold and are treated as physical products.

What trading solutions are available to me?

In the EU ETS and CDM/JI markets, the main products we buy and sell are EU Allowances (EUAs), Certified Emission Reductions (CERs) and Emission Reduction Units (ERUs). Additionally, we also trade UK Allowances (UKAs), RECs, GoOs, ROCs, AAUs and eventually EU Aviation Allowances, New Zealand Units, Australian Emissions Units and others.

Yes. Customers can partner with Shell to buy CERs or ERUs from a specific project that is under development, or to buy CERs from a specific technology (for example, CERs from renewable energy projects) or from a specific geography.

Does Shell provide consulting on energy efficiency?

Shell Projects & Technology, the technical consultancy business, offers the Energise™ programme which can make a significant impact to operating energy efficiency. This is achieved by using advanced energy modeling and benchmarking to help identify areas where improvements can be made, and by a programme of business improvement reviews that target energy reductions. In Shell’s refineries and chemical plants, application of these two programmes have reduced our GHG emissions by 1.7 million tonnes a year and saved a combined $180 million annually.

What is Shell doing about its own CO2 from its production / refining processes?

Our focus on managing CO2emissions remains strong. We continue to reduce the greenhouse gas emissions from the facilities we control or operate. These emissions have fallen by more than 30% since 1990, largely because of operational improvements like reduced flaring. We are involved in a number of demonstration projects for technology to capture and store CO2 safely underground, including the first research pilot in Europe to inject CO2 onshore.

We would like these projects to move ahead faster and are working with governments to help them put the policies and incentives in place to speed up the development of this critical technology. We also continue to roll out advanced lubricants and transport fuels, like Shell Fuel Economy (and in 2009 Shell FuelSave), that can help drivers improve their fuel efficiency.

What is Shell doing about its own CO2 from the fuel that it sells?

In terms of the fuel we sell, Shell has run the Fuel Save Challenge, a programme to train drivers to get the most out of every drop of fuel. On average, a 10% saving is achieved.

Does Shell offset the emissions from its own ships?

Shell does not offset ship emissions. Shell believes that the best way to manage shipping emissions is to develop a cap-and-trade system. This will effectively provide an incentive to reduce emissions and deliver the clear environmental outcome of ensuring that the cap is met.